The impact of top management team tenure heterogeneity on declining firm's innovation efficiency

A firm maybe experiences a flourishing or declining period, and it also
probably survives or even dies in future. Most firms have experienced
decline in their development process. The impact of demand contraction and
COVID-19 has caused more firms to face decline. Under the dilemma of
resources reduction and recovery, the declining firm pays more and more
attention to the efficient utilization of limited resources. It attempts
to achieve turnaround through CEO substitution, adjustment of ownership
concentration, innovation-oriented and other strategies. Based on Upper
echelons theory and resource-based view, using the data of A-share listed
manufacturing firms in Shanghai and Shenzhen from 2015 to 2019, the
impacts of TMT tenure heterogeneity and ownership concentration on the
innovation efficiency were investigated. The results show that the TMT
tenure heterogeneity promotes the innovation efficiency of declining
firms, while the relatively centralized ownership structure negatively
moderates this effect. The robustness analysis of variable replacement and
the solving of endogenous problem also further support this conclusion.
This study not only enriches the application areas of Upper echelons
theory, but also provides practical guideline for declining firms to
replace top management members and to dilute equity in order to achieve
recovery.